Retirement Plans a Major Vehicle for Owning Mutual Funds

A research report from the Investment Company Institute (ICI) indicates nearly half of mutual fund-owning households held funds through multiple channels in 2012. Seventeen percent of mutual fund-owning households held mutual funds both inside employer-sponsored retirement plans and through investment professionals; 5% owned mutual funds both inside employer-sponsored retirement plans and through the direct market channel; and 10% held mutual funds through investment professionals and the direct market channel. Thirteen percent owned funds through all three channels.

Older mutual fund-owning households tend to own mutual funds outside of employer-sponsored retirement plans. In 2012, 73% of mutual fund-owning households age 50 or older held mutual funds outside of employer-sponsored retirement plans, with 82% of these owning mutual funds through investment professionals. In contrast, 57% of younger mutual fund-owning households held their funds outside of employer-sponsored retirement plans. In addition, 27% of older mutual fund-owning households held funds only in employer-sponsored retirement plans, compared with 43% of younger mutual fund-owning households.

The research, which examines ownership of mutual funds through investment professionals, found more than half of mutual fund-owning households owned funds purchased through investment professionals. In 2012, 53% of households owning mutual funds held funds purchased through the investment professional channel, which includes registered investment advisers (RIAs), full-service brokers, independent financial planners, bank and savings institution representatives, insurance agents and accountants. Thirty percent owned funds purchased through the direct market channel, which includes fund companies or discount brokers.

Mutual fund-owning households with ongoing advisory relationships tended to be headed by slightly older individuals and were more likely to have greater household financial assets than households without advisory relationships. The median head of household age for mutual fund-owning households with ongoing advisory relationships was 52, compared with a median age of 49 among households without ongoing advisory relationships.

Median household financial assets for mutual fund-owning households with advisory relationships were nearly double that of their peers without advisory relationships. Mutual fund-owning households with female decisionmakers were more likely to have ongoing advisory relationships than households with male decisionmakers.